Waiting for fresh economic cues, Base metals were trading in tight ranges on Monday. LME three month Copper slipped by another $ 30 per tonne at $ 8053 per tonne. Investors are keenly awaiting direction from Bank of Japan policy meeting. Japanese policy makers are expected to launch fresh monetary-easing measures. Liquidity injections by central banks have been a major bullish driver for growth-sensitive base metals in recent years.
Indian Copper futures were marginally lower on Monday. The Feb contract was last seen at Rs 438.5 per kg on MCX platform. Further decline towards Rs 437.4 per kg cannot be ruled out. The metal settled at $ 8084 per tonne on 18 January 2013, as against $ 8111 per tonne at the start of the month.
World Bank in its forecast in January has estimated that the Copper demand will grow at a modest rate of 2.5% per annum. The bank expects that higher Copper prices will create substitution affect that will accelerate the use of recycling and Aluminium in electricity. Aluminium is 4 times cheaper than Copper at current rates.
LME Nickel three month forward prices were trading at $ 17482 per tonne, against $ 17695 per tonne last week. MCX Nickel was trading at Rs 940 per kg, down 0.51%. The prices tested a high of Rs 946.6 per kg and a low of Rs 937 per kg so far in the day.
Nickel producers that were expected to bring product lines by the end of 2013 are getting delayed that is expected to create a supply side bottleneck in the days to come. Although some projects might find the end of the tunnel but that too are expected by last quarter of this year.
Meanwhile, slowdown in demand forced some Nickel producers to close down their operations. In China, Nickel Pig Iron that is a cheaper substitute for Nickel saw a upside but with Nickel prices dropping down from $ 27500 per tonne levels in early 2011 to $ 17500 per tonne currently this substitution effect is getting nullified.
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